All eyes these days seem to be on the instability of the U.S. and world economies. That’s in part because of the extreme gyrations in the U.S. stock market (as measured, in the chart above, by the Dow Jones Industrial Average).
It’s also because of the instability in the Chinese economy, especially the external sector (as depicted in the chart above, by China’s Balance of Payments).
But, in all honesty, there’s nothing new here. Capitalism is always unstable, and has been from the very beginning. The current instability—within and across countries—is merely one more example of capitalism’s inherent instability.
What I find particularly interesting is the combination of instability and, at the same time, stability.
But to see that instability we have to look elsewhere—beyond the fluctuations in stock markets and balance of payments to the underlying pattern of productivity and wages. And there, at least for the United States, there’s been a remarkable stability over the course of the past four decades, which continues to the present.
As a new report from the Economic Policy Institute (pdf) demonstrates, the growth in the gap between productivity and workers’ wages has remained remarkably stable since the mid-1970s. Productivity continues to increase while workers’ wages have been stagnant. Thus, for example, while productivity grew a bit above 72 percent between 1973 and 2014, the average (median) workers’ hourly compensation increased by about 9 percent.*
And that gap has continued to grow during the current so-called recovery, as real wages (from 2009 to 2014) for all groups of workers, especially those at the bottom, have actually declined.
That, on this Labor Day weekend, is the fundamental stability underlying the apparent instability of contemporary capitalism.
*Here’s even more detail: between 1973 and 2014, gross productivity increased by 1.52 percent a year. During that same period, the median hourly wage grew by only .09 percent a year and median hourly compensation (both wages and benefits) increased by only .20 percent a year.